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0 r i ~-.., ,,- ~'__cS, H..Z " '___ i I GUIDELINES ON COMMUNICA T/ON RESTRICTIONS AND NEW OPPORTUNITIES IN MARKETING JesteburE 13th - 17th May, 197,£ • . ;. -. 0 ,,,-....- O~ C£J ClibPDF - v,w,vw.fastio.com

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/. GUIDELINES ON CON~JNICATION RESTRICTIONS AND NEW OPPORTUNITIES IN MARKETING JESTE~JRG 13th -17th MaTT 1979 INTRODUCTION An over~iew of the progressive %r_ends. in. restrictions on advertising up to 1990, }derived from the predictions of Marketing Advisers, ~oncludes that I? the~prospects are poo~for the following reasons. It is estimated that/among the!5olmo-.t important B.A.T. m~'lrke~s~sL.th_enumber completely free of all bans and restrictions will have diminished from 8 (in 1979) to 2, ,and that those with complete bans on all media will have increased from 8 to 22. Among the remainder there will be, over the period, an increase in the number of media banned or restricted in various ways. • ' Bans apar~,~ restrictions'of varying ev r~y pertain to the content, style, 1 ti~ing, si~e ~d location of advertising. ~ey adve~selylua~fe~t~h~)abi~_ity ~o ~. ~ommunicate product and user image qualities primarily, ie. the! "persuasive" I | u der the most severe restrictions they it diffiCUlt to achieve awa/-eness of the brand and also reduce ~he accuracy" of reach to potential smokers. It is, of course, the broadcast media, TV and radio, which are ~ost effective in co~Tanicating ima0e charac:eris~ics, and these -~re the very media which are most vulnerable and sub~oc~ either to complete ban or to severe re~rictlons" on their use (albe~t often voluntarily by the industry). Thus the predictions referred to above envisage that over the next I0 years, amen9 the 50 markets, TV will be unavailable in 39 and radio in 36 markcts. Cinema, which like TV and radio, can dramatically convey the unique brand and product qua/itics in a memorable way, will be banned in Jl markets. Outdoor and press advertlsing, i~ is forecast, will probably be available to tobacco advertising in abou~ half of the me--kcts~ but point of sale advertising will be permitted in most m,~kets for many years yet. Whilst worldwide trends are reasonably well defined, the particular sequences of cause and effect in any one market have been less predictable. It se.~ms that the many diverse factors which compose the threat to ~ree communication a~-e a unique compound in each market. While they ~-e difficult ~o ~redict, to overloo|¢ them is to risk being t¢2-.en unaw=rcs and i0nore =°risible plaDmed strategies (these can be worked out perfectly well) to prevent their ~orst ~ff~cts materialising. i O C;D CO CD ClibPDF - www.fastio-.c~o.[.~.~

'I • Um ° %- Whether constrained by conditions of total ban or of partial bans with restrictions on available media, or by restrictions across most media w/thout outright bans, the difficulties of communication are much the same, even though they may differ in degree. The problem to be overcome is the reduced opportunity for the consumer (a) to become aware of the existence of the brand, (b) to achieve immediate recognition of its visua/ characteristics and (c) most difficult of allI to receive tl~e complex message which transmits its essential image in such a way that it motivates the consumer towards repeated purchases. IZ is against %h/s background that the following guidelines to the formulation of strateoies by companies have been derived from the proceedings of the Jesteburg C, onfere~ ce. I. THE NEED FOR EARLY PLA~'I~;G. COUPLED VITH CHA~GES IN STAFF ATTII~JDES i. In preparing ~or the longer term future of communication to the consumer, compam.ies must continuously up-date their predictions el the modes of communication which ~ii become unavailable and the timing. In order to do this effectively, it is necessary to be aware o~ all those factors which are lihely to create bans l in a given country and those which may inhibit their introduction. These factors r were set out at length in Session II of the Conference Proceedings. (See Appendlx) I I~. 2. Following care£ul a~sessment o£ the si%untion,/the importance of bringing .~,; ".a~-'.-°plans.~ . ..... to --fruiti°n~ ...... and _.initiating. ..... action well before bans or -~severe restr~ ctions • ... ~ are imposed is absolutely vi~al. ' This is ~he most impor~an% single lesson to be ~-'~ learnt from those markets which are suffering now from complete or virtual coaplete bans on all communication to consumers. ~. All staff members in the company must appreciate changes and their signifi- cance in the mar4~et~n0 environmentI especially in the total ban situation. Changes in ob~=ctivcs and targets must be well understood wh~re scvere restrictions have occurred, together ~-ith the underlying corporate philosophy. It should be .~ recognised that resistance may be encountered amongst s%~If where rapid change is dem~,~ded, tha~ this reaction must be anticipated and managed effectively from the outset. In order to improve morale and drive in the market place, company unity " "' %'ith inter-departmental co-operation and interaction is essential. ~. Inductlcn traini:,.~ with new recruits, and re-trainins of existing staff should be ex-~r-nded so as %o include skills in publicity, so that %hey may be effective ~-.,bassadors of the ccmp~', whenever necessary. 0 Cr~ CO Oo CO ClibPDF - www.fastio.com"

II. THE NEED TO CULTTVATE h"EW SKILLS IN CO.~JNICATION I. It is of considerable importance that the advertising skills of practitioners w~thin the companies and within the agencies should be applied to the new challenges and adjusted to meet them. Advert!sing as it relates to the cigaret±e business is by no means defunct. Many of the techniques which need to be applied to cigaretCe co,~unication are ava/lable within Agency expertise and can be transferred from other product fields. These skills must be harnessed to our changing needs so that they corttribu~e to the creation and application of new creative concepts, and the formulation and execution of communication strategies. 2. Adaptations of existing ~campaign themes developed for the electronic media to the static media and promotions should be undertaken at the earliest opportunity in anticipation of selective bans. It is likely that some media will be available in many countries for several years yet. This is particularly true of Press, Outdoor and Point of Sale. Conceptual studies should be undel-taken of the ways in which the product and image components can be most effectively conveyed via these static media. Already there are lessons to be learned in developing new creative concepts (France)~ in new perceptual display techniques (C~nada), and in %he development o~ highly focussed copy and graphics in print media (USA). All of these make better use of the br£ef moment available, residually, to comm.u.nicate. 3- Advertising to the trade iS likely to be permitted in almost all countries J long after advertising to the consumers has been withdrawn. Companies must seek ways to strengthen and exploit it. This will enta/l more effort to secure the goodwill of the retailer including the developmen~ of good long-term personal relationships and highly effective trade inducements. l#. AS adve.--tising bans tend to fall unevenly on countries within regions, companzes should explore the opportunities to co-operate one with another by beaming TV and radio advei'tising, for ex=mple, in~o a 'ban' country. Obviously the political risks of this action must be weighed up and treated w/th prudence. • .. .... . --.~...-~.. - .... --~ III. TH~ NEED FOR A }IlG~LY DE%qW~OPED A.kl) E~ERT FIELD FORCE I. Bans and restrictions on media advertising will tend to accelerate those stringent uffects on free competitive activity caused by the growing concentration Of power within lar0e retail chains. Companies must, therefore~ reapprise the role of the field sales representative to take account of the ch',~nges in priorities and objectives. CD 0", C~ .,,.~. ClibPDF www fastio corn

~u 2. When media are not freely available and new brands proliferate in a "health-segmented" market, the usual stra±egy of developing a slow but steady awareness, and the 9radu~l extension of trial-and-repeat purchase ma~- well be less appropriate. I£" success is to be achieved, tighter segmentation of both the consumer and distributive markets may be essential with rapid distribution, consumer trial and repeat purchase. At the simplest level, this will require more frequent calls on both wholesalers amd retailers. Beyond ~his, field force re-organisation will also be demanded, plus new techniques in communicating product/brand propositions both to the trade and directly to the consumer. 3- While there will always remain jobs at: a lower level of skill, eg. shelf- fil2ing by part-time housewives, advanced and more specialised sk/lls will be demanded of the future sales force. A higher level of technical knowledge relating to the product and its manufacture in order 1:o deal with questions posed to him about cigarette construction and its consequences will be essen¢ial. Some groups of fleld representatives will need to be skilled negotiators, able to establish good personal relationships with high level trade buyers. Spec/al task forces may be appropriate to achieve specific objectives in certain market segments~ eg. for international brands, for special events and-for consumer contact. The implications of these changes are that: (i) with specialisation, sales forces will be bigger. (il) resilient personalities, higher levels of intelligence and educational qualifications will be sought in future recruits. (ii£) the processes of recruitment~ selection and tra/ning must he carefully planned and carried out. (iv) consequently:- the need will ex/st for greater financial investment in the size and quality of the field sales Zorce. IV. THF "~ED TO I:~ROVE RELATIONSHIPS WITH THE TP~%DE A~,~ SEEK NEW DISTRI~J'TIVE OPPORIUNIT!E5 I. As already noted, pressures on the cigarette manufacturers from the combined effects of adverse Smokin9 & Health publicity, the limitations on advertising, and the concentration of power in fewer distribution organisations %'ili have consequences for the ~u%ure sales force organisa¢ion. Due to this, companies threatened by such combined restrictions should seek ways o£ counteriag these forces. :,~.) O~ CO OO OO ClibPDF - www.fastio.com

~o 2. Collective action by the cigarette manufacturers has been taken in some markets in order to encourage (via financial help) a strong sector which is independent of the large cha/ns. One example of this is with" tobacconists in I Holland, who were offerod advantageous terms in the shape of bonuses, in return for stocking and displa)" of all new brands, and all but the least significant of existing brands. 3- As a general principle~ among all sections of the trade, efforts should be made to improve the level of goodwill by:- (i) ensuring excellent personal relationships (ii) co-operating with retailers, especially the larger outlets, in special merchandising and retailer promotion schemes (iii) improving introductory bonuses ~. Finally, although it may be aga/nst historical practice and principle, early consideration should be given to the possibilities of a solution b7 vertical. integration into the wholesale and retail trade. This course has been adopted both by BAT's competitors and by one or two BAT Associates. While entry into the tobacco distributive trade may have serious financial implications and may be unattractive in terms of return on investment, this ac£ion ma~" .vet be a worth- wh~le means of ensuring that our o~ volume, shar~ and profit remains secure in the long term. V. THE NEED FCR I:-~AGINATIVE .MERC~U.~DISING A~D POTNT-OF-SALE ACT~V!TIES i. Under conditions of increasingly restricted communications, and particularly with a total advertising media ban, merchandising at point-of-sale assumes ever increasing importance. The main objectives will be: - to inform the consumer of the presence of the brand, parClcularly if ~t is a new one - to obta/n recognisable identification of an established brand - to genoratu int,'rest and excitement about the brand via tactical measures (eg. pricing/pack size options) - to stimulate trial purchase and re-purchase O ~O CY~ CD CO C~D ClibPDF - www.fastio.com

e 2. Maximum perceptual recognition should be achieved atpoint-o£-sale by app/'opriate pack style and design, by dynam/c display layout, and b>" point- . for new of-sale advertising material. Opportunities are provided here both creative concepts and Sot the more efficient application o£ existing technique All rhese factors should be the .~-ubject of continuous research. To this end, we should seriously consider the merits of setting up experimental in-store layouts, so that, for example, label desi0ns, pack sizes, PO5 material etc. can be compara- tively evaluated among all the brands on the market~ as in a normal retail outlet. In creating visual designs for an original brand or House, the probability is that brand extensions (most likely having lower deliveries) will Zollow. This prospect and the need for extensions to be nourished by the goodwill of the parent brand should be planned for at the outset. ~o While every means of obtaining consumer recognition of the brand at point- of-Wale must be considered (including tactical pricing and striking visual indicators) care should be taken to ensure that the existing favouraSle image is not eroded, and that the status and prestige of the brand, par~cicularly if ii; is an international one, is not diminished. On princ/ple, longer term s~rategic brand ob.4ectives must always be careZully balmnced against any .shorter term tactical advantages in gaining awareness and trial. VI. THE NEED TO INVEST IN ~LN~) MAINTAIN SUPPORT FOR INTEr,NATIONAL ERA.~S I. Companies must recognise tha+. the gro%~h rate of International Brands ~-i11 continue to exceed that 0£, purely domestic brands in the majority of world markets, and that marketing effor~ and investment should be geared to this fact accordingly. 2. Furthermore, where there are local media restrictions, International Brands assume further importance by Yirtue of their prestige and the current availability Of internationa/ media. As stated ~n Y above~ tactical w.~1-keting activities should be such that th/s pres~.ige is not put at risk. ~. Companies must be alert to the changing tastes of consumers~ bearing in mind that the reputation of an intornationa/ brand (eg. HARLP~RO in Singapore) can bring with it a willingness for smokers, particularly the young, to switc~h to blended cigar-.ttes in a market which is historically marked by Virginia tastes. m c~ 07 cm c9, -4D CO ClibPDF - vvwvv.fastio.com

1 ~. The impor±ance of systematic information gathering and research on con- sumer tastes~ pre[erences a_n~ attitudes to International brands cannot be over-emphasised. VZI. THE NEED TO D:tI%~ELOP PRONOTIONS Ah~) 5~ONSOr~SHIPS~ A.~,'D TO SELECT ~u\~ EVALI;ATE • THE~.! CARE~JLLY I. The advantages of Cac:icA! promotion schemes are that they can increase awareness, generate trial~ provide opportunities for product siting and display~ produce immediate sales and create a degree of excitement and interest in the brand. However2 short te.--a exciting offers can also tempornrily mask possible fundamental shortcomings of product, image and pricing. Furthermore~ they can have adverse e[fec:s on the image and goodwill of the brand. Whenever a promotion scheme is contemplated, there.~ore$ i~ is essential that the choic~ is based on sound research-based evidence. The scheme should also be consonant with the image of the brand and wi~h expectation of the target consumer. It ks also important to balance an)" shore-tots, comgetitive advantage gained by special schemes in a total ban situation against the risks which may be incurred by antagonlsing anti-smoking forces. This could hasten the imposition of further restrictions on advertising and competitive activity. .. 2. All companies should carry, out research into the attitudes of target consumers to different kinds of promotional schemes~ and into the elfects of such schemes on subsoquont image, goodwill and long term brand performance. 3. Sponsorships, unlike tactical promotions, offer the opportunity to build on the long term image of the br~-nd, and to enhance the goodwill towards the brand or house a/ong new dimensions. As with promotions, .it is essential that the choice of activity be very thoroughly rosearched to ensure that it is appropriate to %he target image~ that consumer interes~ is likely to be susie/ned over a long period, that it ks unlikely to stimulate opposition ~rom anti-smoking groups. The compan.Y should also dominate the event and aim to exclude competitors. &. Since sponsorships are essentially geared to build image end 9oodwill in th°. longer termS it is more Yaluable to sponsor under the house or generic name in order to embrace possible fu:ure line extensions and to support any which already exist. 0 f',.3 O~ ",.0 ; CC i 0", ClibPDF - www.fastio.com °